Lockheed sales, profit up

Despite mixed results from its Orlando operations, Lockheed Martin Corp. said Thursday it posted higher sales and profit during its first quarter, beating the consensus Wall Street earnings forecast and lifting its share price.

The nation's largest defense contractor said it earned $665 million from continuing operations, up 20 percent, on sales of $11.3 billion, up 6 percent, in the three months that ended March 25.

Its profit per share was $2.02, compared with $1.57 a share in first quarter of 2011. Wall Street analysts had forecast average earnings per share of $1.70 on sales of $10.56 billion, according to the quarterly Thomson Reuters survey.

Bethesda, Md.-based Lockheed also announced that Chief Executive Officer Bob Stevens, 60, will retire in January after 25 years with the company. He will remain chairman until 2014, subject to approvals. Chris Kubasik, 51, president and chief operating officer, is scheduled to become CEO.

"Our strong first-quarter results reflect the strength of our portfolio and the commitment of our team to deliver value to our customers and shareholders," Stevens said in a prepared statement.

Lockheed cited improved sales from its F-35 Joint Strike Fighter, C-130J transport plane and F-16 fighter jet programs, as well as from certain missile programs, including the advanced Patriot air-defense system and the Terminal High Altitude Area Defense system.

Results at its operations in Orlando, Lockheed's largest presence in Florida, were mixed.

It booked a $25 million increase in sales of Hellfire and Javelin missiles during the quarter; both are managed by Lockheed Martin Missiles & Fire Control in Orlando. It also generated savings of $50 million in tactical-missile programs, including the Joint Air to Surface Standoff Missile, or JASSM.

But Lockheed's Orlando missiles unit also posted lower sales of its night-vision system for fighter jets, known as LANTIRN, short for Low-Altitude Navigation and Infrared for Night. A specific figure was not disclosed. Overall, the company noted a decrease of $45 million in sales of such weapons-targeting systems.

The company reported a $50 million decrease in sales for various other programs, including logistics and training systems. Lockheed's Global Training & Logistics division is based in Orlando. The company didn't specify the effect on training-simulation sales.

In general, Lockheed's first-quarter results indicate that most defense contractors continue to do well despite industry fears of sharp Pentagon budget cuts, said John Pike, founder of GlobalSecurity.org, a defense-research firm in Washington.

"Reports of the collapse of the defense budget have been greatly exaggerated," he said. "So far, we have not seen any big cuts in weapons-acquisition programs. And even if there are big cuts, it's going to take years before it filters down to the work force or company quarterly reports."

Still, Lockheed has good reason to worry about the deficit-reduction "sequestration" provision in Congress, because it would mandate big, across-the-board cuts in the Pentagon's budget in 2013, said Travis Sharp, a defense-budget expert at the Center for a New American Security, a Washington think tank.

"If those steep cuts are imposed next year, it would hit Lockheed and other defense contractors in a really negative way," he said.